The pace of business, the growing number and variety of risks, the changing investor climate and the prevalence of new disruptors mean that boards of directors need to stay at the top of their game especially when it comes to board recruitment strategies. The composition of the board is one of its strategic assets. Competent boards bring the deep expertise of their independent board directors, add the collective wisdom of the group and bring in various perspectives. The collective wisdom and expertise are valuable in the areas of risk and strategy. Let best practices be your guide in developing board recruitment strategies.
Consider How Investors View the Board
One of the considerations in board recruitment strategies is checking the pulse of your institutional investors and activist investors. Do you know what their concerns are? Do you know how they view the current board? Do they feel that experience is lacking?
As a matter of best practices, board directors value independence, racial and ethnic diversity, gender diversity and expertise. Today’s investors are also concerned with director tenure and aging board directors. Succession planning gives boards the opportunity to be proactive with investors. As boards anticipate how to refresh their boards, it provides an avenue to address their investors’ concerns.
It’s vital for boards and their governance committees to be similarly aligned on their priorities. Misalignment in this area will make it challenging for committees to find candidates that fill the needs of the board and have the right fit. Tools such as board self-evaluations and a skills matrix are valuable in helping boards take an objective look at the board’s needs.
Regular Board and Committee Evaluations Set the Stage for Succession Planning
A good first step in a board recruitment strategy is to assess the effectiveness of the board and its committees. This is also a good time to consider how many of the board members are independent directors and how shareholders will view the balance. Best practices suggest that all, or the majority of, board directors should be independent.
Diligent’s Board Assessment Tool is the simple way for boards to help identify opportunities for improvement, find gaps in skills and perspectives, and identify where various board director skills no longer fit with the company’s strategic plan. The results of board evaluations set the stage for meaningful conversations in the boardroom about board refreshment.
Recruit with the Board’s Culture in Mind
Today’s board directors must be able to work alongside existing board directors and assimilate to the board’s culture without losing their own voice and perspectives, which were so attractive in bringing them to the board. Part of the consideration in assessing a board director’s fit with the culture is understanding how the board currently makes decisions, shares information and handles disagreements, as well as how the boardroom climate affects the board’s spirit. The nominating committee is tasked with trying to predict how new board directors will reinforce or evolve the board’s culture, which is no small task.
Draw from a Large Pool of Candidates
Historically, board directors cast a net for board director candidates within their personal and professional networks. Beyond that, they may use third-party board candidate recruiters. The reality is that many more quality candidates exist beyond these two approaches.
Getting the best talent requires casting a wide, deep net at the beginning of the recruitment process to create the largest possible pool of candidates. Rather than sorting through thousands of paper board director resumes manually, it’s wise to let technology do much of that sorting and organizing for you.
Be Innovative About Board Director Succession Planning
We live and work in the Information Age. This new era demands a modern governance approach to board composition. Today’s nominating and governance committees need to take a holistic view of board director recruitment. It’s no longer acceptable to merely replace a board director with another board director who has the same skills and abilities. In addition to doing a gap analysis of skills, nominating committees should be looking at the skills that the board will need within the next three to five years because new board directors will probably be serving at least that long.
Among the questions the nominating committee should be asking are, “Does the board composition give the company the best shot at long-term success?” and “Which skills will enhance the board’s ability to fulfill its duties and lead the company to success?”
Assess and Communicate Expectations About Tenure
It’s equally important for board candidates to understand the modern perspective of board service and tenure as nominating committees and that they communicate that perspective so that both parties are clear on the expectations. The days where board directors could expect to serve on the board as long as they wished and well into retirement are becoming a thing of the past.
New board director candidates should be made aware that the expectations for board director services will be discussed and reviewed on an ongoing basis as part of regular succession planning. Candidates should know upfront that their appointment is contingent on their performance as well as the board’s current and future needs.
The Modern Governance Approach to Board Recruitment Strategies
Technology is a nominating and governance committee’s best friend when it comes to expanding the pool of candidates for the board. Diligent’s Nom Gov tool opens up the profiles of over 125,000 board directors and executives. The tool provides the largest global governance data set for boards to stay up to date, identify governance opportunities and reduce governance risks. Nom Gov allows users to set granular filters to narrow candidates down by gender, diversity, age, director interlocks, overboarding and so much more. With just a few clicks, committees can gain insights into the board’s current composition, allowing them to benchmark against competitors and support their executive search firm to help identify top talent in leadership.
With the spotlight on governance issues, access to data and analytics to spot opportunities and improve your board is more important than ever before. Diligent Nom Gov is the right tool for today’s succession planning and it integrates fully with your Diligent platform.